You have $10,000 to invest for 90 days. Current spot rate: $1.32/₤. The 90-day forward rate is $38/₤. 90-day interest rate in US is 5% and 90-day interest rate in UK is 2.5%. What is the no-arbitrage 90-day forward rate?
You have $10,000 to invest for 90 days. Current spot rate: $1.32/₤. The 90-day forward rate is $38/₤. 90-day interest rate in US is 5% and 90-day interest rate in UK is 2.5%. What is the no-arbitrage 90-day forward rate?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter27: Multinational Financial Management
Section: Chapter Questions
Problem 2P: The nominal yield on 6-month T-bills is 7%, while default-free Japanese bonds that mature in 6...
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You have $10,000 to invest for 90 days. Current spot rate: $1.32/₤. The 90-day forward rate is $38/₤. 90-day interest rate in US is 5% and 90-day interest rate in UK is 2.5%. What is the no-arbitrage 90-day forward rate?
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